South Korea’s LG Electronics Inc. is planning to wind down its Smartphone business which was a loss making albatross around its neck. Since it failed to find a buyer, the company has decided to exit the market but has told analysts that it will retain its 4G and 5G core technologies patents and will go ahead with development for 6G. It has also not as yet decided about licensing out intellectual property.
It has said that it will provide service support for a period of time that will vary region wise. These software updates will be provided to existing customers. The decision to wind down was a result of the breakdown of talks on terms between Vietnam’s Vingroup and LG. This fallout is a major boost to Samsung and Apple though Samsung is said to have a bigger edge as it has several phones in similar price ranges as LG in America.
The smartphone division has had a total loss of almost $4.5 billion in a period of almost 6 years. It is the smallest division and accounts for approximately 7 percent of its revenues. When the division winds up by July, its South Korean employees will be shifted to other businesses and affiliates of LG. The company is also planning on focusing on its other divisions including electric vehicle components, connected devices and smart homes. Action on employees in other parts of the world will take place at a local level.
LG began its smartphone division when the market was growing. At one time, it was the third largest seller of smartphones way back in 2013 with innovations such as ultra-wide angle cameras. However, its flagship models faced software and hardware glitches. Marketing was also not as aggressive as its Chinese counterparts and the company lost traction. Other lagers like Nokia, Blackberry and HTC have seen decline in sales but LG is the first to exit the smartphone business.
Recently, the smartphone division had only about 2 percent of the market share. LG Electronics had seen a rise in its share price after an announcement in January stated that it was looking at all options.